The central bank has been absorbing a large part of the
dollar inflows seen in the market over the past week, traders
and analysts said.
"The RBI continued buying... thus protecting the dollar and
exporters from a fall in value," said Anil Kumar Bhansali
head of treasury at Finrex Treasury Advisors LLP.
The RBI's forex reserves surged to a 10-month high of $588.8
billion in the week ending April 28, latest data showed. Though
the data also accounts for valuation changes, analysts said a
large part of it could also be due to dollar buying
intervention.
Foreign institutional investors bought shares worth 116.31
bln rupees ($1.42 bln) in April on a net basis; $1.7 bln over
the last six sessions alone.
The dollar began the week under pressure on Monday, with
traders betting it might have peaked along with U.S. interest
rates while keeping a wary eye on looming inflation and loans
data. The focus now shifts to U.S. inflation data due Wednesday,
with economists expecting a 0.4% month-on-month increase in the
core inflation rate.
The data will draw scrutiny in the wake of increasing
confidence that the Federal Reserve will opt to pause its rate.
Traders will also watch out for India's inflation data, due later in the week, which will provide cues on the RBI's next rate hike moves. (Reporting by Nallur Sethuraman in Mumbai; Editing by Janane Venkatraman)
Messaging: nallur.sethuraman.thomsonreuters.com@reuters.net))